A Cumbrian commercial radio station has been fined £15,000 by the media regulator Ofcom for running a phone-in competition that its listeners had no chance of winning.

The regulator said Lakeland Radio in Cumbria deliberately chose wrong answers for its Suss The Celeb competition in order to keep it on air and increase its "entertainment value". This meant the majority of the almost 700 people who entered had no chance of winning.

Ofcom fined the station, part of the CN Group, £15,000 and will require the licensee to broadcast a statement of its findings on air.

The regulator was alerted after a listener complained about the second of three series of Suss The Celeb, which aired between 2 January and 1 May last year. The investigation was subsequently extended to all three competitions.

Suss The Celeb ran on a daily basis for a total of 85 days. It offered an initial cash prize of £5, which increased by £5 every day that a listener supposedly chosen at random failed to guess the celebrity voice.

"Ofcom's investigation revealed that, in most of the approximately 85 daily rounds of the competitions, the presenter deliberately selected telephone or SMS entrants who had submitted incorrect answers," said the regulator in its ruling today.

"This was in contravention of the competition's terms and conditions and was a deliberate means of preventing the prize from being won in that round. This led to another round of the competitions, in which the prize fund was greater, thereby increasing the competition's 'entertainment value'."

Listeners entered by text, at a cost of 25p plus a standard network charge, or via an 0845 number costing up to 5p a minute from a landline (mobile costs varied). A total of 671 entries were received.

The complainant had entered the competition on numerous occasions but had not been selected to participate. "The complainant alleged that, in view of the relatively small size of the station's audience, the fact that his correct answer had never been selected was evidence that the competition had not been conducted fairly," said Ofcom.

Lakeland Radio broadcasts to a population of 52,000 people and has an average weekly reach of 15,000 listeners, giving it a 10.9% share of the audience, according to the latest official Rajar figures.

It is the latest, but far from the most serious, of a string of fake phone-in scandals to hit the TV and radio industry. Last year GCap Media was fined a radio sector record £1.1m by Ofcom, which accused it of a "gross failure" of senior management and of obstructing its investigation.

Explaining its decision today, Ofcom said: "The fact this was a small local radio station with a limited audience did not detract from the seriousness of the code breaches.

"Although an apology was broadcast on Lakeland Radio shortly after the unfair conduct came to light, the committee was of the view that, while the apology had been timely, it had not explained the unfair conduct sufficiently clearly to allow listeners the opportunity to seek refunds."

Ofcom also said senior management had made "some efforts" to speak to staff about the spate of phone-in scandals elsewhere in the industry, but it said "no checks had been undertaken to ensure that these communications had been received and/or understood".

"Since the licensee had become aware of the unfair conduct, it had taken steps to improve its compliance training and procedures going forwards. However, the committee was not entirely assured that such steps were sufficient or that the improvements would be effective in ensuring future compliance," the regulator added.

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